GM will raise production for a promotion; is this really a good idea?

As a response to the success of the cash for clunkers program, GM will be turning on some of the plants that were temporarily shut down and will begin amping up production.

The employees that were cut to 4 days a week will begin working their 5 days a week again; the workers that were left without jobs when their plants halted production will have jobs again. No one is complaining about the good news for jobs.

But, is this really a good idea for GM?

Sure, the company will be producing the more fuel efficient cars, thanks to the cash for clunkers program these are the cars that are being bought up as though they won’t be there tomorrow. However, after the program is over and consumers go back to not being able to afford the cars without the huge down payment of an old car or truck, what will happen to the extra cars that they are producing?

The cash for clunkers program was always a temporary fix to a much larger problem with auto makers. I believe that GM is smart for trying to cash in on it, but it’s a bit too little too late because the program will be out of cash in September and what will happen then?

I hope GM doesn’t get itself into a lot of trouble by amping up production on the cars and then losing money on them.

UPDATE: The Cash for Clunkers program is set to end on Monday at 8:00 PM. So GM should probably think twice about restarting the production.

No related posts.